Our Models

The Equity Risk Premium (ERP)

Market-implied compensation for equity risk, updated daily using observable data and forward-looking expectations

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What it is

What is this model?

The Equity Risk Premium framework infers the compensation investors require for holding equities over risk-free assets by solving a multi-stage valuation identity that links observed market prices to forward-looking cash flow and growth assumptions.

The model builds on the conceptual foundations developed by Prof. Aswath Damodaran, refined to support a more responsive, data-rich implementation.

What the model does

Calculates a market-implied cost of equity by solving a present-value identity with forward-looking earnings and payout inputs.

Derives the ERP as the spread between the implied equity return and the 10-year U.S. Treasury yield.

Anchors growth and payout assumptions in observable expectations across multiple horizons.

What it is

What is this model?

The model builds on the conceptual foundations developed by Prof. Aswath Damodaran, refined to support a more responsive, data-rich implementation.

What the model does

Calculates a market-implied cost of equity by solving a present-value identity with forward-looking earnings and payout inputs.

Derives the ERP as the spread between the implied equity return and the 10-year U.S. Treasury yield.

Anchors growth and payout assumptions in observable expectations across multiple horizons.

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Why It’s Relevant

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Earlier Regime Insight

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Governance-Ready Classification

Provides interpretable, auditable regime labels suitable for disciplined risk and oversight frameworks.

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